With the new foreign exchange policy initiated by the new government, airlines operating on international routes now face major challenge on airfares.
Recent report claim the cost of return tickets of major Nigerian routes flown by the foreign airlines in the country had been increased by between 80 per cent and 120 per cent of the previous fares, depending on the carrier, time of booking and the season.
The recent development cut across Nigeria-North America routes, Nigeria-South Africa route, and Nigeria-Europe routes. Airfares on the Lagos-London, Abuja-London, Lagos-New York, Lagos-Atlanta, Lagos-Houston, and Lagos-Johannesburg routes were examined.
Findings also showed that local airlines operating international flights, especially Arik Air and MedView Airlines, had increased their airfares.
For instance, airfares on the Lagos-London and Abuja-London routes now cost an average of N380,000 for the economy class seat, as against the average of N200,000 a year ago on the British Airways and Virgin Atlantic Airways. This represents an increase of 111 per cent.
Similarly, on Air France, an economic ticket on the Lagos/Abuja-London routes now goes for about N360,000, while Lufthansa German Airlines charges N380,000. These represent an increase of 80 per cent and 90 per cent, respectively, when compared with an average fare of N200,000 on the routes a year ago.
A Business Class ticket now goes for as high as N3m as against the N1.5m a year ago on the Lagos-London route.
On the Lagos-Atlanta and Lagos-Houston routes, Delta Airlines and United Airlines, which used to fly Economy Class passengers for between N270,000 and N330,000 some 12 months ago, now render the same service at an average fare of N600,000, depending on the time of booking. This represents an increase of about 100 per cent.
South Africa Airways and Arik Air, which used to fly the Lagos-Johannesburg routes for between N100,000 and N120,000 for the economy class, now fly the route for between N180,000 and N220,000, depending on the time of booking and the season.
The Lagos-Paris route, which used to go for N180,000 on the average, now goes for around N400,000. This represents an increase of 120 per cent.
Late last year, the new administration of President Muhammadu Buhari had unveiled a fiscal policy, through the Central Bank of Nigeria, restricting access to foreign exchange and funds transfer out of the country.
While this has had advantages for some sectors of the economy, foreign airline operators have complained of their inability to repatriate revenue to their operational bases as a result of the new policy.
Following the difficulty in repatriating earnings from Nigeria, some of the airlines initially began restricting cheap fares on the Nigerian routes in the last quarter of last year, leading to an indirect hike in fares.
At the time, the effect was felt more on second tier routes from Lagos-London-Atlanta, Lagos-London-New York, Lagos-London-Miami, Lagos-London-São Paulo, Lagos-London-Houston; or Lagos-Frankfurt-New York, Lagos-Frankfurt-Chicago, Lagos-Frankfurt-Los Angeles, and Lagos-Frankfurt-Shanghai.
Citing Nigeria’s slowing economy amid forex scarcity, some international airlines are now contemplating reducing flights to the country or operating smaller capacity aircraft as a short-term measure.